Maryland state income tax

This notebook shows how Maryland’s state income tax, including credits, operates holistically.

Examples

from policyengine_us import IndividualSim
import pandas as pd
import plotly.express as px

LIGHT_GRAY = "#F5F5F5"
GRAY = "#BDBDBD"
BLUE = "#5091cc"
LIGHT_BLUE = "lightblue"
DARK_BLUE = "darkblue"


def make_tax(adults, children):
    sim = IndividualSim(year=2022)
    sim.add_person(name="head", age=25)
    members = ["head"]
    if adults == 2:
        sim.add_person(name="spouse", age=25)
        members += ["spouse"]
    for i in range(children):
        child = "child{}".format(i)
        sim.add_person(name=child, age=6)
        members += [child]
    sim.add_tax_unit(name="tax_unit", members=members, premium_tax_credit=0)
    sim.add_household(name="household", members=members, state_code="MD")
    sim.vary("employment_income", max=100_000, step=100)
    employment_income = sim.calc("employment_income")[0]
    md_income_tax = sim.calc("md_income_tax")[0].round()
    mtr = sim.deriv("md_income_tax", "employment_income", wrt_target="head")
    return pd.DataFrame(
        dict(
            employment_income=employment_income,
            md_income_tax=md_income_tax,
            mtr=mtr,
            adults=adults,
            children=str(children),
        )
    )


# Make a table of state taxes for different numbers of adults and children.
l = []
for adults in range(1, 3):
    for children in range(0, 4):
        l.append(make_tax(adults, children))

df = pd.concat(l)

LABELS = dict(
    employment_income="Employment income",
    md_income_tax="Maryland income tax",
    mtr="Marginal tax rate",
    adults="Adults",
    children="Children",
)

COLOR_MAP = {"0": GRAY, "1": LIGHT_BLUE, "2": BLUE, "3": DARK_BLUE}

fig = px.line(
    df,
    "employment_income",
    "md_income_tax",
    color="children",
    animation_frame="adults",
    labels=LABELS,
    title="Maryland income tax",
    color_discrete_map=COLOR_MAP,
)
fig.update_layout(
    xaxis_tickformat="$,",
    yaxis_tickformat="$,",
    plot_bgcolor="white",
    xaxis_gridcolor=LIGHT_GRAY,
    yaxis_gridcolor=LIGHT_GRAY,
)
fig.show()

Building simulation with reform ()

Building simulation with reform ()

Building simulation with reform ()

Building simulation with reform ()

Building simulation with reform ()

Building simulation with reform ()

Building simulation with reform ()

Building simulation with reform ()

Total marginal tax rates range from -20.3% to +15.3%, excluding cliffs.

fig = px.line(
    df,
    "employment_income",
    "mtr",
    color="children",
    animation_frame="adults",
    labels=LABELS,
    title="Marginal tax rate for a Maryland household",
    color_discrete_map=COLOR_MAP,
)
fig.update_layout(
    xaxis_tickformat="$,",
    yaxis_tickformat=".1%",
    # yaxis_range=[-1, 1],
    plot_bgcolor="white",
    xaxis_gridcolor=LIGHT_GRAY,
    yaxis_gridcolor=LIGHT_GRAY,
)
fig.show()